Fintech advancing banking operations

INDUSTRY VIEW

9 May 2017

Continued margin pressure and mounting costs are forcing banks to re-examine their operations in a bid to improve efficiency. Taskize is a problem-solving network for banking operations and a gateway to AI and machine learning in the back-office.

Fintech is helping to reshape the financial services industry. To date however, many fintech firms have focused mainly on customer experiences at the start of the deal-making process: Which trades should you buy? How should you buy them? They have been focused on improving the front-end customer experience, while still building on legacy infrastructure with all its limitations. Only a handful have forayed into the complexity of financial services operations – the transaction processing heart of finance. Financial services operations are complex, requiring specialist expertise and experience. This is where Taskize aims to make a difference. Taskize focuses on post-trade processing, providing practical fintech that drives efficiency in banking operations.

There are millions of bank transactions each day, most of which go through with no human intervention. But despite all the technology available, a percentage of those trades do go wrong for various reasons, leaving counterparties exposed. Sometimes, the cause of a failed transaction can be as basic as missing or unmatched information; but while the cause may be simple, getting it fixed is not quite as straightforward.

As a simple example, say you’ve moved your corporate bank account, and you’ve also placed an order for an asset before you had a chance to notify your counterparties of your new account details. The firm you’ve bought the asset from is unable to deliver it to you – they have the wrong account details! Consider what happens when the expected asset does not arrive. It’s as if you were at an airport waiting to catch a flight and the preceding plane is late; we’ve all had that experience where everything gets knocked out of kilter. When you do not receive the expected asset, it has a knock-on effect – perhaps you owe it to someone else as collateral, and now don’t have the asset to match that obligation. So, you must go into the market again, to buy another asset to fulfil your obligation. Perhaps you don’t have the cash on hand to buy the asset, so you borrow the money in the short-term markets, leading to interest charges. The whole thing spirals and you may be fined for having mis-performed. The result is that you may have let a client down, incurred additional cost, and damaged your reputation — all because you didn’t tell a trading partner that you moved an account!

When transactions go wrong between banks, it takes people to put them right. Banks employ hundreds-of-thousands of people in their back offices around the world, and when errant transactions need to be fixed behind the scenes, operations teams have to work across time-zones to find the right person in the right firm to help. It is a costly and time-consuming process, and while things are awaiting resolution, counterparties are left hanging.

John O’Hara, CEO of Taskize says, “Taskize has been developed to help operations people be more efficient so that problems are solved faster, risk is better managed, and banking reputations are maintained. Taskize is transforming the way financial services back offices resolve issues in and between firms, using its proprietary machine learning to aid human decision-making.”

To date, banks have focused investment and innovation on the front office. Today with margins under pressure across the industry, banks are compelled to re-examine efficiency in a more profound way. In the pursuit of cost and operational efficiency, the financial services industry, like many others, is striving to deploy AI in middle- and back-office operations. O’Hara foresees machine-learning technology applied to operational data to provide “satisfactory” inferences to aid human operators.

He continues, “Machine learning will support human decision making, but it won’t replace the need for human judgement. There will always be a place for human judgement in critical transactions, but machine learning technology will increasingly be augmenting the human touch, creating a powerful man-machine partnership in financial services operations.”

Taskize brings digitisation and machine learning to the traditionally manual back office environment. It helps banks solve operational breaks quickly, by bringing the right people in the right firms in the right job roles together, creating a network of operations teams that can collaboratively address issues in a secure environment. It is the problem-solving network for banks.